14 Best Tech Stocks That Aren't on Your Radar  <font color="#6f6f6f">Kiplinger's Personal Finance</font>


Market value: $4.9 billion

Consensus rating: Strong Buy

Science Applications International (SAIC, $88.60) provides tech support and enterprise IT services to all branches of the U.S. military, NASA, DOJ, the State Department and all the national intelligence agencies. SAIC’s services include technology and equipment platform integration, maintenance for ground and maritime systems, and logistics, training and simulation support.

SAIC has been delivering roughly 10% annual earnings gains over the past five years, including a 9% profit improvement for its fiscal 2020, which ended in January. In February, SAIC agreed to acquire Unisys Federal, a leading provider of IT services to the federal government in an all-cash deal valued at $1.2 billion. The deal expands SAIC’s capabilities in government IT areas, builds its customer base and is accretive to per-share earnings.

Recent contract awards include $653 million from the Federal Aviation Administration (FAA), $655 million from the U.S. Air Force and $950 million from the Defense Department. These are in addition to $1.1 billion of national security contracts awarded during the January quarter. And SAIC enters fiscal 2021 with contract backlog exceeding $15.3 billion.

The company has plenty of liquidity to offset temporary coronavirus-related funding delays. SAIC generated $437 million of free cash flow in fiscal 2020, up 180% year-over-year, and ended the year with $155 million of cash and $400 million available on its credit line.

SAIC is among the dividend-paying tech stocks on this list. It doles out 37 cents per share quarterly, translating to a modest yield of 1.7%. Its conservative payout ratio of 24% supports further increases in the future.

Jefferies analyst Sheila Kahyaoglu is one of eight analysts writing a Buy opinion on SAIC over the past quarter, versus just one Hold. She recently raised her price target on shares from $90 to $95.

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